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Asia/South Asia
China's real progress against sellers of fakes
Mure Dickie and Raphael Minder

          The last few weeks have been good for global brands seeking help from China's civil courts in a market long ruled by pirate producers.
Ferrero, the Italian confectioner, said the other day it was "very pleasantly surprised" after winning, an appeal, a lawsuit against a Chinese rival that copied its flagship Ferrero Rocher chocolates.
That ruling came shortly after Starbucks, the international cafe chain, won a case in Shanghai against a coffee shop that adopted its Chinese name and a look-alike logo.
Recently, a Beijing judge ordered a local market, famed for its cut-price pirated clothing, to pay compensation to big brands Burberry, Chanel, LVMH and Prada.
'The case against the Silk Market was notable since it appears to be the first time a Chinese court has penalised not just the vendors of fake goods but also their landlord Beijing Xiushui Haosen Clothing Market Co.
By targeting landlords, the five brands hope to persuade them to adopt a "two-strike" policy under which they would first suspend and then cancel the tenancies of vendors found selling pirated goods, says Joseph Simone, partner with law firm Baker & McKenzie in China.
"What we are trying to do is to harass the landlords using legitimate measures, both administrative and in civil law, to bring them to the table," Mr Simone says.
Lobbying on behalf of Prada and its peers against fake sellers' landlords has also prompted action by the Beijing Administration for Industry and Commerce, the body on the front line of the capital's campaign against counterfeits.
The administration plans to impose fines of up to Rmb100,000 ($12,400, 7,000 euro10,200) on landlords of markets where it finds copies of officially protected luxury brands on sale, Mr Simone says.
"We expect them to start implementing this at the end of this month," he says.
There has also been a rapid increase in the number of criminal cases brought against copyright violators.
In spite of these recent victories, no one is suggesting the big brands are winning their war on Chinese pirates, however. Sales of fakes have, if anything, grown and counterfeit luxuries, from replica Louis Vuitton bags to fake Harley Davidson motorcycle jackets, have displaced Great Wall T-shirts as the souvenirs of choice for international tourists.
The legal battles are not over. The Shanghai cafe ordered to stop using Starbucks' Chinese name says it plans to appeal, and Silk Market landlord Xiushui Haosen has challenged the ruling against the market.
"Just because people are selling fakes in the market, you cannot conclude that we are deliberately colluding with them ... that's not right," says Wu Weishuang, assistant to the chairman at Xiushui Haosen.
Even if such challenges fail, international lawyers recognise the difficulty of making headway against piracy in a country that suffers from widespread poverty and rural unrest, issues officials see as more pressing than trademark protection. Courts often fail to enforce their rulings and local officials protect pirates, who are considered to be important sources of tax and employment.
Robert MacLean, head of the European trade practice at Crowell & Moring, says legal progress is mostly limited to areas such as Shanghai, which are focused on attracting foreign investment. "When you move to the hinterland of China, it is a bit of a no-man's land as far as intellectual property protection is concerned," Mr MacLean says.
Victories for big brands will not necessarily also help smaller victims of piracy.
"If you are a company of the size where you can bang a drum and get politicians interested over here [in the west] ... then you might get a reasonable result. But there is a whole tier of manufacturers who are simply not in that market," says Andrew Clay, head of the intellectual property department at UK law firm Hammonds.
Indeed, even after the lawsuits, fake Armani jackets and Manchester United football shirts remain on sale at Beijing's Silk Market.
A vendor at a stall selling counterfeit Polo sweaters says she never heard of the recent legal action. "I can't even read, so what would I know about the law?" she laughs, pointing at the polo player logo on the sweaters. "I don't even know what this is a picture of."
FT Syndication Service


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